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The Mistreatment of Workers

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During the 1920s, the US ran off of a laissez faire capitalism, the system Ayn Rand wants and the one I want. However, there was horrible mistreatment of workers, low pay, long hours, dangerous conditions, etc. Does a laissez faire capitalism always lead to this? Am I even right in caring what happens to these workers?

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However, there was horrible mistreatment of workers, low pay, long hours, dangerous conditions, etc.

I would challenge your assessment. By what standard is this "mistreatment"? That is, relative to what option at the time can this be said to be mistreatment? Capitalism didn't create poverty, it inherited it. What can be said is that lasseiz faire capitalism removes it faster than any other system, by improving the standard of living of those living under it.

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During the 1920s, the US ran off of a laissez faire capitalism, the system Ayn Rand wants and the one I want. However, there was horrible mistreatment of workers, low pay, long hours, dangerous conditions, etc. Does a laissez faire capitalism always lead to this? Am I even right in caring what happens to these workers?

I challenge the premise. In the 1920's the US government had imposed income taxes, central banking, antitrust laws and a number of other government interventions onto the economy. While freedom was still the dominant element, the principle of separation of state and economics had long since been breached. Some of the anti-labor actions of the day, such as the use of police to violently break up attempts at union formation, were clear violations of individual rights.

You must also be sure to keep context. How were workers treated before the advent of capitalism? What was the standard of living then? How long did people have to work, and under what conditions? In short, how much of the worker poverty we saw in the early days of capitalism was caused by capitalism, and how much was merely inherited from the pre-capitalist era?

I recommend Andrew Bernstein's book The Capitalist Manifesto for a solid examination of both the early history and theoretical justification of capitalism.

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I strongly suggest Andrew Bernstein's The Capitalist Manifesto. In it he presents a powerful case for Capitalism, including addressing these claims. He makes a clear case that the "mistreatment" of workers was anything but, and that the hardships workers suffered were a holdover from non-capitalist systems, such as feudalism and mercantilism.

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Could capitalism have advanced poverty? If I look out only for myself and personal, financial gain, a way to get more money is to pay workers less and force them to work longer.

This doctrine is known in economics as the "iron law of wages". It is false. For a good explanation of why, read George Reisman's article "Classical Economics Versus the Exploitation Theory".

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If I look out only for myself and personal, fiancial gain, a way to get more money is to pay workers less and force them to work longer.

You couldn't force them to work; in a truly capitalist society, there is a government to prevent that. In a capitalist society, they have a choice: to work for you, or not to. If your conditions are unfavorable, they can go elsewhere. As a contrast, in a socialist society, they don't have that choice.

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...However, there was horrible mistreatment of workers, low pay, long hours, dangerous conditions, etc.
You can look at more contemporary examples, in the so-called "sweatshops" of Asia. Working conditions in some places might shock an American. However, the clincher is that the workers accept these conditions because they are better than their previous alternative. In many poor countries unemployment is high. Much of it is "disguised unemployment", where (say) a family of seven is farming in an area that only needs 4 of them. When a poor-paying job opens in a nearby city, a few family members will head there and work at that job quite willingly, because it is a big improvement to what they were otherwise doing.

Does a laissez faire capitalism always lead to this?
In each of these countries, it is not laissez faire that led to this, but the precursor to laissez faire, which was either some type of socialism, or some type of feudal system.

I think it is important to point out that the treatment of workers is not limited to low wages. Often, actual violations of rights are involved: including physical abuse. Often workers do not report these violations, because they know that their jobs depend on being on the good side of their supervisors. The shortage of jobs is not caused by laissez faire, but by the socialism or feudal system that is being replaced. In addition, it is the older systems -- particularly feudal ones -- that are often to blame for the lord/serf attitudes.

Am I even right in caring what happens to these workers?
Sure, if some type of genuine mistreatment happens under laissez-faire Capitalism, then that should form part of its evaluation.

About a month or two ago, NPR did an interesting feature on workers in Chinese factories. It appears that things have changed for Chinese workers over the last decade, in the main coastal cities (the interior is still a different story). Where it used to be that workers would stream into the city, and line up for jobs, now there are enough jobs for all seekers, and workers routinely leave jobs and switch to better ones. Some workers have been "organizing" (which is odd for a communist country). There is more emphasis on safer work-places. This improvement in conditions reflects the increased wealth that has resulted from abandoning significant chunks of the old communist scheme.

Feudalism and Socialism create true monopolies -- i.e. accumulations of wealth and power backed by government force, and therefore impossible to break via legal means. This, in turn, results in exploitation by those who wield this power. Economic reforms start to break this link. The closer one gets to true Capitalism, the the less the political power (force) that can be brought to bear, and therefore the less true mistreatment that takes place.

Edited by softwareNerd
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Could capitalism have advanced poverty? If I look out only for myself and personal, fiancial gain, a way to get more money is to pay workers less and force them to work longer.

In addition to all the other points that have been made, remember that in a free market you must compete with other businesses for the labor available in a given area. You have no power to force any worker to accept any particular wage, set of hours or working conditions. You have only the power to offer a trade -- and if a better trade is available to labor at another business, they will generally take it, leaving you without a workforce.

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Could capitalism have advanced poverty? If I look out only for myself and personal, fiancial gain, a way to get more money is to pay workers less and force them to work longer.

And if they work for you voluntarily, when someone else chooses to offer more because he wants better workers, then they will leave you and go to him. The net effect is a worker gets paid what he is worth and what he is willing to accept given his next best options. That is not mistreatment.

At a macro level the hypothesis that capitalism advances poverty is not born out. Take every measure of standard of living and quality of life and look at their history over the course of the last 1000 years and you see this incredible spike at about the time fo the enlightenment. Life expectancy, quality of life. Your basis thesis doesn't pan out.

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Could capitalism have advanced poverty? If I look out only for myself and personal, fiancial gain, a way to get more money is to pay workers less and force them to work longer.

Another way to get more money is to charge consumers more for your products and force them to buy more.

What's wrong with the latter is exactly what's wrong with the former.

Edited by agrippa1
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Let's try to do a comparison to a little-known fact about jet aircraft. An aircraft where smoking is allowed consumes more fuel than one where it is forbidden. But until the government banned smoking on aircraft, not a single airline ever prohibited smoking in their planes. Why not? Because the one that did would loose smoking passengers to those that didn't. The costs saved on fuel would be offset by the lost passengers.

Something similar happens in the relationship between employer and empoyee. The employer that pays very low wages will see his albor force migrate to comeptitors who are willing to pay better. He'll be left without enough workers, or only with the dregs no one else cares to employ. In any case his productivity, and profit, will suffer.

Of course, the owners of, say, steel mills could get together and agree to pay low wages to all their workers. In a capitalist system no laws would keep them from doing it. What then? Why, the best workers would leave for other industries. In a capitalist sysem no laws would prevent them from doing so. Not to mention that one steel mill owner or another would realize if he could cut costs elsewhere and hire better workers by paying them higher wages, he'd clean up the competition.

The next question us usually: but what about monopolies?

It would be exceedingly hard to maintain a monopoly on an industry without 1) government coercion or 2) outright acts of piracy (like torching a comeptitor's installations, killing competitors, robbing them, etc). In a capitalist system the first situation would not arise, and the second would be highly illegal.

A company could have a monopoly on a product through the simple expedient of getting a patent for it. Sure. But patents run out, and the competition can come up with a reasonable substitute, or one that does not violate the patent. A company could also gain a monopoly on a prodcut by keeping its design and manuifacturing methods secret; that wouldn't be against the law. But such a company runs two risks: 1) that a competitor will figure it out and make it himself, and 2) that the competitor will obtain a patent and keep the would-be monopolist from manufacturing that product. It would be a lot simpler, and more profitable, to license it.

More often you'll see that government coarcion has a lot more to do with lower wages. For example, some states require employers to pay a raft of benefits to their employees and dependents. Such fringe benefits are not in themselves bad, but it should be a choice between the employer and employee, not the governmetn's. Some companies would be better off ofering them, others wouldn't. Some employees would be better off having them, others wouldn't (I wouldn't, for instance, due to my income tax circumstances). Other regulations, whteher work-related or not, add to an emploter's costs, which hurts his ability to offer higher wages.

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Thanks for all the responses. I've been a strong follower of objectivism but when it came to capitlaism, my belief was a little more tenous. I agree witht he points made here. If one employer has low wages, the workers will flock to next employer. In the end, the mistreatment of workers will end up hurting the business though loss of employees more than the gain through low wages. Thank you all for helping clear this up.

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